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Volume 12, Issue 32: August 9, 2010

  1. How to Revive a Stagnant Economy
  2. Double-Taxing the U.S. Energy Sector: Closing a Loophole—or Tightening a Noose?
  3. Progress in Afghanistan Requires Realism about Pakistan
  4. Bullfighting Ban Sparks Controversy
  5. This Week in The Beacon

1) How to Revive a Stagnant Economy

The U.S. economy, as President Obama intimated when he asked corporate leaders to increase their hiring, remains weak. The official rate of unemployment hovers at 10 percent, and the number of hours worked in private-sector jobs has dropped by more than 9 percent since about the end of 2007.

As a group, construction workers bear the greatest burden, with employment in their ranks having fallen 28 percent. Employment in durable goods manufacturing (e.g., autos, appliances) has dropped 20 percent. The number of hours worked in the service sector overall is stuck at about 8 percent below its 2007 peak.

According to Independent Institute Senior Fellow Robert Higgs, a sustainable economic recovery would require a substantial reduction of government spending, taxes, and regulations—along with a credible commitment by the government to pursue a less burdensome course. “Unfortunately,” writes Higgs, “anemic private employment tempts politicians to intervene even more in the economy, heightening the uncertainty and discouraging investors further in a vicious cycle.”

“Stagnant Private Sector,” by Robert Higgs (Pittsburgh Tribune-Review, 7/30/10)

Depression, War, and Cold War: Challenging the Myths of Prosperity and Depression, by Robert Higgs

Opposing the Crusader State: Alternatives to Global Interventionism, edited by Robert Higgs and Carl Close

Arms, Politics, and the Economy: Historical and Contemporary Perspectives, edited by Robert Higgs

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2) Double-Taxing the U.S. Energy Sector: Closing a Loophole—or Tightening a Noose?

A bill that proposes to end the tax deduction that U.S. oil and gas companies receive for the amount of income taxes paid to foreign countries would unfairly penalize energy producers and jeopardize the economic recovery.

The bill—titled the Close Big Oil Tax Loopholes Act—“is meant to punish America’s oil and gas industry, perhaps in reprisal for the Deepwater Horizon disaster, largely the fault of a British company, and more likely to expropriate additional tax revenue from a politically vulnerable sector that is perceived popularly as being extraordinarily profitable,” writes Independent Institute Senior Fellow William F. Shughart II.

Americans and their political representatives suffer from a serious misconception. When they hear how much money an industry earns, they often fail to compare that figure to the industry’s tremendous size or to profit rates in other industries. But such comparisons are essential if one is to properly assess an industry’s profitability. The American oil and gas industry earns about 7.7 cents per dollar of assets, compared to 7.9 cents for U.S. industry as a whole, according to Shughart. Moreover, “unlike GM, Chrysler and Wall Street, U.S. energy companies are not (yet) wards of the state,” Shughart concludes.

“Crushing Oil Companies and Their Workers,” by William F. Shughart II (The Washington Times, 7/27/10)

Taxing Choice: The Predatory Politics of Fiscal Discrimination, edited by William F. Shughart II.

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3) Progress in Afghanistan Requires Realism about Pakistan

In his latest op-ed, Independent Institute Senior Fellow Ivan Eland illuminates two problems facing U.S. policy in Afghanistan. The first is the Obama administration’s failure to acknowledge that the U.S. occupation of Afghanistan is the major cause of the rise of the Taliban in nuclear-armed Pakistan. The second is the administration’s failure to recognize that the interests of the United States and Pakistan currently diverge.

Pakistan has supported the Afghan Taliban, according to Eland, because it believes that doing so would combat the influence of India in Afghanistan. The re-alignment of the interests of Pakistan and the United States thus requires a bold, new policy move. It entails withdrawing U.S. troops from Afghanistan, thereby deflating the Taliban insurgency on both sides of the border, and to permit the Taliban to play a role in Afghanistan—on the condition that it not harbor al-Qaeda.

“In short, it is time to end the nation-building in Afghanistan, because that occupation has been fueling Islamic radicalism and instability in the more important Pakistan,” writes Eland. “And it is time to fulfill the promise of completely withdrawing from Iraq as quickly as possible to avoid entangling the remaining troops in the likely renewal and escalation of ethno-sectarian violence.”

“What to Do About the Wars,” by Ivan Eland (8/4/10)

Recarving Rushmore: Ranking the Presidents on Peace, Prosperity, and Liberty, by Ivan Eland

The Empire Has No Clothes: U.S. Foreign Policy Exposed, by Ivan Eland

Partitioning for Peace: An Exit Strategy for Iraq, by Ivan Eland

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4) Bullfighting Ban Sparks Controversy

The parliament of Spain’s Catalonia region has struck down bullfighting after 2012. Although the sport has fallen out of favor—60 percent of Spaniards polled don’t support it—the bullfighting ban is almost as unpopular, with 57 percent opposed to it.

According to Independent Institute Senior Fellow Alvaro Vargas Llosa, proponents of the ban resorted to fallacious arguments to advance their agenda. “If the undoing of all domination over nature is what the critics want, that is exactly what they should argue for,” he writes.

If bullfighting’s opponents wished to pursue a truly righteous strategy, they would target the government subsidies the sport receives. “About 500 million euros are spent annually by the European Union and the three levels of the Spanish government,” continues Vargas Llosa. “Would bullfighting disappear without the subsidies? It might. But this is a decision for free individuals to make. Culture that lives on diktats ceases to be culture.”

“Bullfights—The Beginning of the End?” by Alvaro Vargas Llosa (8/4/10) Spanish Translation

Liberty for Latin America: How to Undo Five Hundred Years of State Oppression, by Alvaro Vargas Llosa

The Che Guevara Myth and the Future of Liberty, by Alvaro Vargas Llosa

Lessons from the Poor: Triumph of the Entrepreneurial Spirit, edited by Alvaro Vargas Llosa

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5) This Week in The Beacon

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